Uncertainties send mortgage rates flying, Bankrate survey finds

NORTH PALM BEACH — Uncertainty over the economy sent mortgage rates soaring over the past week, with the average conforming 30-year hitting to 6.77 percent, according to Bankrate.com's weekly national survey of large lenders.

The average 15-year fixed rate mortgage surged to 6.32 percent, while the average jumbo 30-year fixed rate jumped modestly to  7.68 percent. The average 1-year ARM hit 6.24 percent and the average 5/1 ARM soared to 6.48 percent.

Mortgage rates posted the biggest one-week increase since February, after a combination of inflation news, multi-billion dollar bank write-downs and loss reserves, and fewer loan purchases by Fannie Mae and Freddie Mac.

The June Consumer Price Index fueled inflation worries, and comments favoring interest rate increases from two members of the Federal Reserve. Poor quarterly bank earnings were a direct result of deteriorating loans, making mortgage bond investors increasingly nervous about further defaults.

And despite available capital from the Federal Reserve and the Treasury, Fannie Mae and Freddie Mac continue to raise capital their way, which means buying fewer mortgages. While each of these factors played a part in this week's increase, weak economic growth could have a downward influence on mortgage rates in the weeks to come.

Since the beginning of the year, the average 30-year fixed mortgage rate has been as as low as 5.57 percent, meaning that a $200,000 loan would have carried a monthly payment of $1,144.38. But at 6.77 percent, a $200,000 loan would mean a monthly payment of $1,299.86.

Survey results:

— 30-year fixed: 6.77 percent,  up from 6.42 percent last week (avg. points: 0.45).

— 15-year fixed: 6.32 percent, up from 5.95 percent last week (avg. points: 0.46).

— 5/1 ARM: 6.48 percent, up from 6.05 percent last week (avg. points: 0.49).

Bankrate's national weekly mortgage survey is conducted each Wednesday from data provided by the top 10 banks and thrifts in the top 10 markets.

Bankrate’s panel of mortgage experts predicts generally expects rates to climb over the next 30 to 45 days. This week, half of the panelists expect mortgage rates to continue climbing. Nearly one-in-three predict rates to drop while the remaining 19 percent forecast that rates will remain more or less unchanged.